New Orleans' city government, already facing a host of financial challenges, got another one this week when Criminal Sheriff Marlin Gusman threatened to ask a federal judge to order the city to pay millions of dollars more a year to take care of prisoners in the city's jails.

With the city already facing a shortfall of more than $2 million in its 2009 contribution to Gusman's office, the prospect of having to ante up millions more was the last thing the City Council's Budget Committee wanted to hear Wednesday.

But on a day when the committee heard plenty of discouraging news about the overall state of the city's finances, from declining sales and property tax revenues to the need to spend as much as $40 million on City Hall repairs, Gusman brought even more bad news. He said he also needs millions of dollars more to cover medical services for prisoners and to provide guards at Criminal District Court.

In a letter last week to Chief Administrative Officer Brenda Hatfield, Gusman said his office is facing "a severe budgetary crisis." He said he will need more than $36 million from the city in 2010, or about $13.5 million more than the city budgeted for his office this year.

Assistant Chief Administrative Officer Cary Grant promised Wednesday that the administration won't "leave the sheriff hanging out there" and will find money to pay for guards at the courthouse.

But that left the larger issue of how much the city must pay to house and feed thousands of prisoners a day unresolved, and Gusman ended the conversation by saying, "I guess we'll have to go back to court on the consent decree."

Since 1990, the city has been bound by a consent judgment in a federal lawsuit to pay the sheriff's office a set amount each day for every "city prisoner" at Orleans Parish Prison and the city's other jails. A city prisoner is one serving time for a municipal infraction or awaiting trial. After a prisoner is convicted of a state crime in Criminal District Court, he or she becomes the state's responsibility.

For many years the city's "per diem" payment was set at $19.65 per prisoner. Early in 2003 it was raised to $22.39 a day, which was the same figure the state paid the sheriff for housing state prisoners. Since then, the state's payment has risen to $26.39 a day, but the city's figure has remained unchanged.

The city's 2009 budget includes $22.7 million for Gusman's office, but expenditures are running ahead of the budget, and the city faces the prospect of having to find at least $2.2 million more than budgeted to meet its court-ordered obligations for the year -- and that is before any increase in the per diem figure.

Since Hurricane Katrina, the number of beds in Gusman's sprawling complex of jails has fallen from 7,200 to 3,500 and the number of inmates has dropped from an average of 6,020 a day to 3,450 a day. Of that number, about 2,700 are city prisoners.

The number of deputies and other employees on his payroll has also fallen sharply, from 1,267 to 683, Gusman told the Budget Committee, but their average pay has increased by 57 percent.

The decreases in the number of prison beds and inmates has not resulted in greater efficiency, Gusman said. In fact, he said, "a smaller jail means a more expensive jail" because the number of deputies cannot be reduced as sharply as the number of prisoners.

He said his office got by for a while after Katrina thanks to money from the Department of Justice and the Federal Emergency Management Agency but that all the chickens now have come home to roost.

In fact, he said, the price his office pays for chicken to feed prisoners has risen by 70 percent since before Katrina, and the prices for other staples such as bread, rice, tuna and green beans have shot up by anywhere from 43 percent to 92 percent.

Besides the basic per diem payment for housing prisoners, which at $22.39 a day for an average of 2,700 city prisoners would amount to $22 million a year, the city also is obligated by the 2003 federal court consent judgment to pay Gusman $3.2 million a year to cover inmates' medical care and $2.4 million to provide guards at Criminal District Court.

Gusman told the Budget Committee that both figures are inadequate. He said his office's medical bill this year will come to almost $5.5 million and the courthouse bill to $3.3 million, creating a combined shortfall for those services of about $3.2 million.

Explaining why the bill for medical care is so high, Gusman said he must spend $27,000 a month to care for just 10 inmates, all awaiting trial, with especially severe medical needs, such as for kidney dialysis.

He said his office operated at a loss in 2008 but no longer has the reserves to cover shortfalls.

In a letter last week to Mayor Ray Nagin, Gusman said that unless he got more money to provide security in the courthouse, he would withdraw all his personnel starting today except those stationed in courtrooms, where by law he must provide security. The chief effect would be to eliminate guards at the building's entrances.

Gusman did not repeat his deadline demand in his appearance before the council, leaving unclear how many of his deputies will be on hand at the Tulane and Broad courthouse on Monday morning.

Gusman has not always been so forceful an advocate of the criminal sheriff's need for money. In fact, when he was the city's chief administrative officer and later chairman of the council's Budget Committee a few years ago, Gusman often was critical of the way then-Sheriff Charles Foti billed the city.

Gusman and his boss when he was CAO, Mayor Marc Morial, often alleged that Foti deliberately tried to run up his bill, such as by keeping prisoners in custody until shortly past midnight so he could collect an extra day's per diem for them. Foti insisted the fees were legitimate.

After Gusman was elected sheriff in late 2004, his view of the situation changed radically.

Gusman got one piece of good news Friday when the city announced that FEMA now agrees with the city that the jail known as Templeman 1 and 2, which before Katrina housed 1,800 inmates, was more than 50 percent damaged by the storm and should be demolished and replaced with a new facility rather than repaired.

FEMA listed damages to the building at $32.4 million and the demolition cost at $385,581.

The city has long maintained that Templeman's mechanical, electrical and plumbing systems were significantly damaged and that to repair the building would have required costly and ultimately wasteful interior demolition and reconstruction.

"We are very pleased that after several years . . . FEMA has agreed with the city's position that it would be irresponsible to spend valuable recovery dollars to repair this severely damaged critical public safety facility, " Deputy Chief Administrative Officer Cynthia Sylvain-Lear said. "We will now be able to construct a new public safety facility that meets current detention standards" and will require fewer deputies to operate it.

FEMA previously had declared Templeman 3 and 4, which housed 1,460 inmates, more than 50 percent damaged. That building has been demolished.

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Bruce Eggler can be reached at beggler@timespicayune.com or 504.826.3320.